Benefits & Features
Asset Based Lending
ABL is a financing product that leverages the receivables, inventory, machinery and equipment that a company owns as security towards a revolving line of credit. Typically, ABL’s will advance up to 90% of receivables and up to 85% of inventory depending on the quality of the debtors and the business. While an ABL may have higher fees than a traditional bank, covenants tend to be less restrictive allowing the business to expand or work through a turnaround; unburdened by lender pressure.
Most ABL’s look at companies with revenues from $15 million with at least two years of financial statements. Their due diligence process is thorough and can take up to 60 days.
ABL's are able to work with certain banks and other lenders but prefer to be in first position on most transactions. They will pay out a credit facility with an existing bank rather than take a second position.
Factoring
Receivables financing is a growing product in Canada and while appears similar to ABL is in fact an entirely different product. The basis of factoring is purchasing qualified receivables by way of a Master Purchase and Sale Agreement “MPSA.” The MPSA allows the factor to purchase the invoices from the business and then collect the receivables that are paid directly to them as a part of the agreement. The factor will advance up to 90% of the full invoice value and pay the 10% reserve less their fee to the client once collected on the invoice.
Factors act as the business’ collections department and usually boast a dedicated team of collection professional that deal with the accounts payable departments for their client’s qualified debtors. They assist their clients by advancing funds within 48 hours of receiving a schedule of invoices and set realistic credit limits for each debtor.
Discounting
Discounting is another form of factoring, but the premise differs slightly in that the qualified invoice is purchased outright and paid by the discountor. There is no recourse to the client and there is no reserve amount paid once the invoice is collected on. Typically, discounters use a flat fee pricing structure and work well for spot financing scenarios.
Specialty Products
Often businesses require a number of solutions to make their working capital and assets perform in order to grow the business. GENquest works with a number of specialists that have expertise in these areas to help us create a comprehensive financing solution that covers all the facets of your business financing requirements..
Debtor in possession
Purchase Order financing
Cross border transactions
SR&D Tax Credit financing
Machinery & Equipment Financing